Compliance February 27, 2024

Senate to Hold Julie Su Re-Nomination Hearing Wednesday

The same Senate committee will also host a panel to discuss methods of expanding access to defined benefit plans.

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The Senate Committee on Health, Education, Labor and Pensions will host two hearings on Wednesday.

The first, which will start at 10 a.m. ET, will host a panel of experts to testify on the expansion of defined benefit plans as a way to improve retirement security. The second, at 2 p.m. ET, will be the reconsideration of Julie Su’s nomination to head the Department of Labor. No vote has been scheduled on her nomination yet.

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Su, first nominated by President Joe Biden in April 2023, was re-nominated in January. Su was nominated after former Secretary of Labor Marty Walsh resigned in March 2023, and while her nomination previously passed the HELP Committee, it stalled in the full Senate and never received a full floor vote.

Opposition to Su has stemmed primarily from her track record as California’s secretary of labor, including her work on the implementation of rules regulating the status of independent contractors.

Meanwhile, despite the nomination not being taken up by the Senate, Su continued to head the DOL in an acting capacity throughout 2023, which some Republicans have argued is unlawful. The American Securities Association and others argued in comment letters that as an acting secretary, she may lack the authority to finalize proposals, such as the DOL’s retirement security proposal.

Su’s opponents rely on the Federal Vacancies Reform Act of 1998, which says acting secretaries may only serve for 210 days, unless another statute specifies otherwise. The Government Accountability Office released a legal opinion in September 2023 stating that the Vacancies Act does not govern Su’s role as acting secretary, largely because she was confirmed as deputy secretary of labor prior to Walsh’s resignation. According to the GAO, Section 552 of title 29 of the U.S. Code states that if the Secretary of Labor resigns, then the deputy secretary may perform the duties of the secretary until another is appointed.

With Su still pursuing that appointment, Wednesday will be the first step in her second attempt at securing confirmation to the post.

Administration February 27, 2024

EBRI to Host Webinar on Impact of Credit Card, Student Loan Debt

The March 27 event will see panelists discuss how mounting debt can negatively impact employees’ 401(k) contributions and balances.

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At a time when Americans’ credit card debt has reached a record high of $1.13 trillion, and following the October 2023 resumption of student debt payments, many individuals are struggling to save for the future. 

Experts at the Employee Benefit Research Institute and J.P. Morgan Asset Management are hosting a webinar on March 27 to share research about how consumers with spending “spikes,” who lack the income and cash reserves to support spending volatility, are likely to increase their credit card debt or take a loan from their 401(k) plan. 

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Panelists on the webinar, “How Consumer Spending Spikes and Student Loan Debt Have a Negative Impact on Savings and Retirement,” will also discuss provisions in the SECURE 2.0 Act of 2022 that allow for changes to 401(k) plans and financial wellness programs, including emergency savings accounts and matching contributions to 401(k) plans in exchange for qualified student loan debt payments. 

The recent research by EBRI and J.P. Morgan found that making student loan payments has a negative impact on average 401(k) employee contribution rates and account balances.  

For example, the three-year-long study found average retirement account balances were lower for those who made student loan payments than for those who did not. Among employees with tenure ranging from five through 12 years, the average retirement account balance for participants who made student loan payments was $86,109, as compared with $107,687 for those who did not make payments.  

While credit card debt is on the rise and also has a negative impact on retirement savings, data from Fitch Ratings revealed that U.S. consumer spending was “remarkably resilient” in 2023, largely due to robust job and income gains, strong household balance sheets and finances, slowing inflation and improving consumer sentiment.  

However, according to Fitch, household debt increased sharply over the last four quarters, mainly because of mortgage debt and credit card borrowing, and household debt service is expected to increase to 11.7% by 2025 from 9.9% in 2023. On the positive side, credit card outstanding balance growth is starting to decelerate. 

The webinar will be held from 2 p.m. to 3 p.m. ET and feature the following panelists: 

  • Craig Copeland, director of wealth benefits research at EBRI; 
  • Michael Conrath, chief retirement strategist at J.P. Morgan; 
  • Sharon Carson, retirement strategist at J.P. Morgan; and 
  • Barb Marder, president and CEO of EBRI (moderator). 

Registration for the webinar is available on EBRI’s website. 

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